Advice please - father going into residential home to join mother. What to do with their house?(4 Posts)
Hi, I wonder if anyone can give me some advice. My mother is a resident in a nursing home, suffering from Alzheimer's and the aftereffects of a stroke. My father has been living in their house and visiting every day. They have expressed a desire to be together and the opportunity has been presented whereby they can move into a double room in the nursing home, with a view to move to the residential (non-nursing) side of the home when mum is fit to do so.
Now the question of their property - my Dsis and I feel that it would be a good idea to rent out their property as it would give them an income whilst the value of the property increases. The alternative, ie selling the property gives them a finite pot of funds to cover their costs. (They are self funding their care). I need to understand the implications of property rental - tax implications etc. There is another possible alternative, where we buy part of the property from them and then rent it out. It does need some work doing on it to bring it up to either a rental or saleable condition. It's all happened very quickly and we will need to start sorting out the contents anyway before we can do anything. I'd just like to know who to talk to! I wondered if Citizens Advice would be a good start, plus a couple of local estate agents. Thanks for reading.
Depends in part on what the local rental market is like and the extent to which the property meets that demand.
I would get at least a couple of letting agents round at an early stage and get their views on rental values, what you would need to do to the property first, and the likely type of tenant.
I would also get some sales agents round and again interview them on what you would need to do to gain maximum value, plus price and the time it might take to sell the property.
Then essentially do the sums and weigh up whether you can cope with the hassle etc.
I initially let my mums flat for 6 months (which is the minimum tenancy length). Everything happened quite suddenly so it gave me a deadline to get the flat empty and sorted. Plus simply emptying it and cleaning added to the potential value. The tenancy bought some decision making time though actually the same tenants are in there 18 months later.
I doubt I made much money, certainly in the first few months, but the rent covered the costs of making the property presentable and the tenants have really looked after it. A lot depends on the quality of tenants you will be able to get. Plus how much your parents will need access to the capital.
What need more said - you can't possibly decide until you have an idea of the relative values.
We have been in a similar situation with my MIL's property after she moved into a care home with its huge costs. I did exactly what other posters said -- got the valuations for both sale and rental. Asked the agents advice about what we'd need to do to the property to sell or rent.
Given the low interest rates, we decided that yield in interest on the lump sum after a sale would have been far lower than profit from monthly rental income. We decided rental was a double-win situation, there's income from rental (higher than interest yield from savings) and the property should also increase in value so provides further return on investment.
We took into account letting agent fees, tax to be paid, cost of repairs/maintenance and insurance before calculating returns. The letting market is buoyant in a lot of areas (we rent a house ourselves and in the past 3 years, it's always been occupied). Obviously, a more desirable area will produce higher rental values. My MIL's house is near an outstanding (Ofsted rating) primary school so it has great demand — our house is in a different (less desirable) area but the rental market is still buoyant and rental values are not that much lower.
I worked out the potential tax payable having worked out her total income including from rental income and it was still worth renting. We will hire an accountant to do her tax return. All property repairs / maintenance / letting agent fees / insurance can be offset against tax -- which helps lower the tax bill.
The biggest hassle in renting the property is getting it ready for rental. We've need to get a little painting and decorating and some flooring replaced. The letting agent will organise all this for you if you want and then give you the bill. I'm a cheapskate -- so always want to know that I'm getting the best deal possible so have decided to organise this myself. I've done the same with our own rental property -- I call in repair people from my list when something needs fixing, if I can't fix it myself! I think the letting agents take percentage from repairs when they send their own people in. I do however let the letting agent organise gas safety certificates and inventories -- these are time limited jobs so best to let them get that done in time for lets!
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